The Unicorn Housing Market 101

The housing market is no mystery.
But it can seem complicated!

It boils down to this;
That which is most valued by Buyers in a home for sale, is that which penalizes Buyers the least, and presents the greatest opportunity.

Opportunity for what?
That depends.
Sometimes it is opportunity to move up. Sometimes it is the opportunity to downsize. Sometimes it is the opportunity to add value. Other times it is the opportunity for life in their home to be just a little bit easier by means of a different floor plan, larger yard, closer proximity to a place they frequent (school, university, hospital, work, daycare, etc).
Whatever the opportunity is, you can rest assured it is related to current home buying trends, the stock market, local and national events, and, well, other events such as the announcement of a long-awaited vaccine.

There are other pressures on the market that affect home buying decisions too; Interest rates go low and, traditionally, home prices rise because Buyers feel like the ‘good deal’ is in the interest rate they get.
When Buyers feel like they have the time and money to direct toward improving properties, fixers sell.
When Buyers feel like they have more money than time, fixers tend to sit and houses that are ‘dialed’ move more quickly.

And then there was the Crazy Clown Car of cascading events that was 2020.
December 2020 marks the turning point in a worldwide topic of concern: The Great Pause of 2020, spurred by a global pandemic; COVID-19.
We do not need to explain what this is, as there is not one segment of the American Experience that was not deeply affected by this systemic disease.
Instead, we can direct our attention to the effect this unicorn event is having on the housing market as we move into a much brighter 2021.

Interest rates will rise.
They have to.
With the announcement of the development of a vaccine that is over 90% effective, the stock market celebrated, the national mood began to elevate, and the light at the end of the tunnel shown brightly as people are once again planning vacations, weddings, celebrations, and their next moves.
With economic positivity and hints of what economic recovery may look like, there is the added reality that soon, the Feds will no longer need to incentivize lenders to hold rates at the astonishingly low rates we saw in the fourth quarter of 2020.

Does that mean housing prices will fall?
Fall is a word used to describe a dramatic descent.
No. They will not ‘fall,’ but they will correct to a normal level and that correction will look like this;
Interest rates will rise as more housing inventory hits the market (because homeowners are no longer too terrified to let people through their homes), and prices will correct down a bit to normalize.

Wait!
You mean we can’t get a 2.5% home loan anymore?
Correct. You will soon not be able to get a home loan in the 2%s.

Let me break something down for all the Buyers who were looking for a ‘good deal’ during the dark days of the fourth quarter of 2020;
A house payment on $600,000 of loan at 2.5% is $750/month LESS EXPENSIVE than the payment on the same loan at 4%.
That is a far better benefit than scrounging to find the one lost leader that may be purchased for $20,000-$30,000 below the list price.
Interest rates in the 2%s and low 3%s is an amazing deal!

That means, right now, as I type this, Buyers can stop looking for the unicorn of a house, and take advantage of the unicorn that is available to everyone in the form of low, low, low interest rates on their purchase loans.
The money they save in the form of dramatically low monthly house payments is the unicorn!
It does not matter what house they buy: fixer, brand new, midCentury, farmhouse, farm, condo - you name it! They are ALL ‘good deals’!
And for many, there is a unicorn under the tree this holiday that can be enjoyed for decades to come.

Will you be one of them?